Rental Housing (Multifamily and Single Family Rentals)

View Original Post - Renat Yusufov

Everyone’s point of curiosity: when will Millennials go from renting apartments to buying homes?

Well, it turns out there is an extra dimension to consider: homes for rent (not sale).

It would happen sooner or later, and as Millennials are growing up and starting families, they are seeking more space, They are finally leaving their 2 bedroom with a roommate in the city for a small home in the suburbs.

The bad news is, however, due to stagnant wage growth and continued monetary havoc (see interest rates…still), The ownership of the homes will take a backseat for now to renting. For the last few quarters we saw the Blackstones and equivalents on buying sprees of rental single-family communities and developers of these communities throughout the sunbelt and top-10 metro areas’ suburbs.

Regardless of whether they are buying or renting single-family, the bigger story is that multifamily developers will need to find a new topic to communicate in their business plan. Per Greenstreet Advisors, “As today’s renters move on from apartment living toward first-time home buyer or first-time single-family renter years, there will be fewer young adults to replace them. Beginning In 2020, there will be net declines in 25- to 29-year-olds, and by year 2025, there will be net declines of the broader group of 25- to 34-year-olds.”

“ While investors can still make money in apartments, they need to be more selective when deploying capital in both the public and private market. The very favorable demand-supply balance of the last five years is moderating, and pockets of oversupply will become more prevalent as developers move too slowly to recalibrate to decelerating demand.”

Additional Info on SFR: Arbor Data 2018